Strategy 2Q25: Thesis Confirming
- Christian Evans
- Aug 12
- 2 min read
BTC Holdings: 628,946
BTC Yield: 25.0%
BTC mNAV: $75,278
Premium to NAV: 50.07%
Strategy "reported earnings" two weeks ago and little has changed with the thesis. The premium shrunk from 93.72% to 50.07% this quarter, and it was north of 100% when I initiated coverage in the middle of April. I believe most of the premium shrinkage can be attributed to the massive inflow of capital into other BTC exposure. I believe this claim can be supported both quantitatively by looking at inflows into BTC products and ETFs and qualitatively by listening to Strategy's earnings calls. They seem to be much more concerned now with differentiating their value offering from others coming to market. Fortunately for me there's little differentiation to be found. They recognize that alternatives seem to be proliferating:
When investors choose to buy bitcoin through other avenues they drive the price of BTC up while the price of MSTR stays constant, leading to some of the much needed premium contraction.
Strategy now owns 3% of all BTC that will ever exist, which is quite remarkable. They also conducted the largest U.S. IPO this year with their STRC preferred equity issuance. They claim to have a "fortress Bitcoin balance sheet", reasoning that they have ample digital assets to cover all of their outstanding claims.
Annualized interest and preferred dividends are now $614 million, well above what Strategy is able to support with their underlying software operations. While they've made it clear for some time they don't plan to pay interest and dividends with the software business, I think this burden is reaching a point where payments are entirely dependent on Strategy's ability to capital raise. The software business brought in 78.7 million in gross profit this quarter and -15.5 million in EBIT (adjusting out the impacts of BTC revaluation). They recognize this, and the following slide is meant to comfort investors:
I don't think equity investors will like what happens when the money isn't flowing as easily and they have to raise equity in a tough environment. Strategy investors, meet dilution.
In the event where they do need to sell BTC, the premium should theoretically turn negative. Investors pricing in further BTC sales should then price MSTR shares below the current BTC NAV (assuming players are rational, which isn't likely). Because I believe there are still multiple pieces of the thesis that haven't played out, I'm comfortable continuing to hold the position even with the relatively quick positive return.
I'll be back discussing this pitch with Silver Fund in a few short weeks now. I plan to hold until the premium is around 20-30%, and may even evaluate further ways to make money off what I feel is blatant speculation. In the meantime I suggest you check out the links I've attached below. Over the summer I've seen much more coverage and scrutiny of BTC treasury companies, which is both vindicating and entertaining. I love feeling like I'm witnessing financial history so early in my career.
Jim Chanos on shorting MSTR:
Be Water Substack article on the similarity between BTC Treasuries and 1920's investment trusts:
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